By Stuart Condie

SYDNEY--Carma shares slipped as the Australian used-car refurbisher and dealer debuted on the country's stock exchange.

Shares in the company, which is backed by private-equity providers including New York-based Tiger Global, were 7.4% lower shortly after conditional trade in the stock began during Wednesday's session.

The move gave Carma an enterprise value of about 277.8 million Australian dollars, equivalent to US$180.3 million.

The company raised A$100 million through an initial public offering, issuing 26 million new shares at A$2.70 each and selling 11 million shares previously held by early investors. The stock slipped to A$7.50 in early trade.

Carma plans to allocate about half of the IPO proceeds to working capital and marketing. It is looking to expand its Sydney facility and into other nearby areas as it targets Australia's highly fragmented used-car market.

There are more than 4,300 pre-owned-vehicle dealerships in Australia, a country of about 25 million people. None of the largest operators, which include ASX-listed Eagers Automotive, owns more than a 2% market share.

The company's business model differs from typical used-car yards. Carma buys second-hand vehicles from consumers before refurbishing them in a suburban industrial unit, using a process reminiscent of how they were originally assembled on a factory line. The cars are then sold online.

Carma's pitch is that its vetting process gives customers peace of mind when buying a used car, removing the responsibility for checking a vehicle's quality from consumers who are often ill-equipped for the task.

Its online platform, adorned with galleries of images shot at its in-house studio, is aimed at time-poor, digital-savvy motorists.

"It improves one of the least enjoyable consumer experiences: buying and selling used vehicles," Chairman Owen Wilson said in the IPO prospectus.

Vehicle sellers are quoted a price generated by Carma's proprietary AI-driven model, while buyers get a seven-day trial period after purchase. Vehicles not deemed suitable for consumer sale are channeled to Carma's dealer-only auction product.

Carma is still loss-making, but operating expenses per vehicle as a proportion of revenue declined from 74% in the first half of its 2023 fiscal year to 43% in the same period two years later. It is projected to drop further to 31% across the current 2026 fiscal year.

Carma made an A$21,550 earnings loss on each vehicle in fiscal 2023. That is forecast to drop to A$8,300 in the current year.

Carma also raised A$30 million this year in a convertible-note offering, using the proceeds to expand its inventory and to support the expansion of its production facilities. It has increased its headcount to 185, from about 50 in March.

Tiger sold its stake down from 36% to 26% over the last month, while Massachusetts-based venture-capital firm General Catalyst cut its holding to 4.1% from 10%.

Write to Stuart Condie at stuart.condie@wsj.com

(END) Dow Jones Newswires

November 04, 2025 19:35 ET (00:35 GMT)

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